retirement

payroll deduction plan

- a retirement plan not subject to eligibility, vesting or funding standards as required by ERISA plans - a non qualified retirement plan

IRA

- allow a maximum of $6,500 per individual or $13,000 per couple per year (with a catch-up of $1,000 for each individual aged 50 or older) - allows tax deferred growth until the individual withdraws the funds

403(b) plan

- are available to employees, not students, of public educational institutions such as schools - also allows employees of certain nonprofit organizations, such as religious organizations and those qualifying under section 501(c)(3) of the irc, including private colleges, research and scientific foundations, private hospitals and medical schools - a special type of tax-favored retirement plan allowed for nonprofit entities - amounts contributed are often invested in annuity contracts, so these plans are sometimes referred to as tax-sheltered annuities

Keogh plan

- must include all full time employees age 21, with at least 1 year of service - allow tax deferred growth until the individual withdraws the funds - have premature distribution penalties before age 59 1/2

457 Plan

- non qualified but tax advantaged retirement plan - only retirement plan permitting withdrawals, for any reason, before age 59 1/2 without penalties - only plan that allows withdrawals for any reason - incur ordinary income tax on the amount withdrawn - only benefit is there is no 10% additional tax

401k plan

- the employer share of contributions cannot exceed 25% of the total payroll

Under Keogh Plan provisions, a full-time employee is defined as one working at least how many hours per year?

1,000 hours or more per year, regardless of the number of days, weeks, or months worked

Supplemental Executive Retirement Plan (SERP)

a non qualified plan designed to provide additional retirement benefits limited to a select group of management or highly compensated employees

a disadvantage of a defined benefit pension plan to the employee is that

at retirement, the employee may not be earning as much as she was at her peak earning power

defined contribution plan

employer promises to make certain contributions to the plan each year, but does not commit to paying employees a specific benefit when they retire

defined benefit pension plan

one that promises to pay employees a certain specified benefit at retirement

when a participant in a 401(k) plan dies before retirement, the proceeds are distributed

to the designated beneficiary without going through probate